House panel to launch investigation into short-term 'junk' plans

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Dive Brief:

The House Committee on Energy and Commerce is launching an investigation into short-term health plans that critics deride as "junk" plans, Chairman Frank Pallone, D-N.J., announced Wednesday. The committee will look into what the plans cover, their business practices, advertising strategies and their popularity with consumers.

Leading Democrats kicked off the joint inquiry by requesting documents and information from 12 companies that either sell, market or assist consumers in signing up for the short-term, limited-duration coverage, including market giants Anthem and UnitedHealth Group.

The Trump administration expanded short-term health plans last year, a move that Affordable Care Act supporters blasted as sabotage. The skimpy coverage isn't required to cover the 10 essential benefits of the ACA, including behavioral health, substance use treatment and maternity care. "We're going to investigate these plans and hold them accountable," Pallone said Wednesday at the America's Health Insurance Plans 2019 National Health Policy Conference.

Dive Insight:

Short-term plans, originally designed to be a low-cost, temporary safety-net and only available for three months, were expanded for the 2019 plan year, making it easier for insurers to market them as cheap alternatives to ACA plans. Short term plans can now last 12 months (and can be renewed for up to three years) and are open to anyone, not just young people or those who can't afford other coverage as originally intended.

As an additional wrinkle, a 2018 Kaiser Family Foundation report found short-term plans could destabilize the ACA exchange market, creating higher premiums for full-coverage plans and leaving a greater number of people uninsured.

Patient advocates and Democrats generally oppose the plans, which aren't required to meet the minimum standards for coverage under the ACA. Millions of Americans with pre-existing conditions could be saddled with a plan that doesn't cover their essential care and could see their out-of-pocket costs rise.

"Patients think [junk] plans comply with the protections of the Affordable Care Act, but insurers and brokers in some cases are selling junk plans that mislead consumers about the details of the plans and their policies," Pallone said.

Health Subcommittee Chairwoman Anna Eshoo, D-Calif., and Oversight and Investigations Subcommittee Chairwoman Diana DeGette, D-Colo., will also take part in the probe.

One case exemplifying the concerns is Hollywood, Florida-based Simple Health Plans, an insurer shut down by a federal judge after selling what the Federal Trade Commission deemed "worthless" plans to thousands of patients, leaving them saddled with major medical expenses.

Last month, four Democratic senators introduced the Protecting Americans with Preexisting Conditions Act of 2019, which would require the Trump administration to roll back its October policy allowing taxpayer subsidies and support for health plans that don't provide comprehensive coverage.

Under the guidance, states can increase out-of-pocket maximums and weaken health benefits for their residents, according to a December letter sent to the HHS, CMS and the treasury from 42 senators. Multiple states, including California and New York, forbid the sale of short-term plans.

An Energy and Commerce statement cited one company that refused to pay for a patient's cancer treatment, leaving him with an unexpected $800,000 in medical bills.

Along with documents, the investigation heads are requesting answers to a series of questions, including what percentage of applicants are denied coverage and why, how the plans are marketed, how much commission agencies and brokers are paid, and whether they engage in post-claims underwriting, a practice that can leave patients on the hook for the price of care that should be covered.